Visa Inc (NYSE:V) spends $5.3 billion to take over the Silicon Valley Start-up – Plaid. It is roughly double to that of the private valuation of Plaid. API Software of Plaid, aka plumbing, is behind the fintech companies. It allows the start-ups to connect with the bank accounts of users. Some of the Plaid customers include Robinhood (a mobile investing app), Venmo (a peer-to-peer payment app), and cryptocurrency exchanges that include Gemini and Coinbase. Goldman Sachs is an exclusive advisor for the deal.
One in four people in the US uses Plaid API
According to a communiqué from Plaid, one in four people in the US use an app to connect their accounts to the fintech company. The early investors in Plaid are the venture arms of American Express, and Citi, MasterCard, Goldman Sachs, and Visa.
Raises funds of $250 million
Plaids mobilized $250 million in the year 2018 through a Series C funding when its valuation is $2.7 billion. Mary Meeker, the venture capitalist, has joined its board of directors. The company also attracted investments from Index Ventures and Kleiner Perkins.
A1 kelly, Chief Executive Officer of Visa, said in a call to the investors on Monday that it has grown at a CAGR of 100% since 2015. He said the long term deal would position Visa as a leading player for the next decade. As a result of this deal, Visa will expand its addressable market and improve associations with fintech companies. It will also promote the growth of Plaid. Commenting on the takeover, Kelly said Plaids fits well its business and boosts revenues. Visa expects that Plaid deal will add 100 basis points to the net revenue growth by the year 2021.
Since its inception in 2013, Plaid added customers steadily and integrated with over 11,000 banks. It connects to over 20,000,000 consumer accounts. Besides doubling the customer base from 2017 to 2018, the company expanded to Canada and the US.
Zach Perret, Chief Executive Officer of Plaid, said the company came to know about Visa after the initial strategic investment. The co-founders of Plaid, including William Hockey and Perret, stated the Visa brand can enhance the presence of Plaid across the world.